{"id":68811,"date":"2023-10-04T19:51:43","date_gmt":"2023-10-04T23:51:43","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/cathie-wood-predicts-ai-will-lead-to-deflation-and-drive-markets-higher\/"},"modified":"2023-10-04T19:51:46","modified_gmt":"2023-10-04T23:51:46","slug":"cathie-wood-predicts-ai-will-lead-to-deflation-and-drive-markets-higher","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=68811","title":{"rendered":"Cathie Wood Predicts AI Will Lead To Deflation And Drive Markets Higher"},"content":{"rendered":"
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While rising rates and sticky inflation may have put a damper on growth stocks in recent years, Ark Invest founder and CEO Cathie Wood is confident that they are primed for a rebound as innovative new technologies like artificial intelligence act as a major deflationary force.<\/p>\n

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\u201cInnovation solves problems\u2014especially AI,\u201d Wood, whose firm has roughly $15 billion in assets under management, said in an interview at the seventh annual Forbes\/SHOOK Top Advisor Summit at the Encore At Wynn hotel in Las Vegas on Wednesday. \u201cWe do believe that most advisors and asset allocators are short on exposure to disruptive innovation.\u201d<\/p>\n

She remained steadfast in defending her playbook of investing in disruptive technology and growth companies, which have rebounded from last year. While Wood\u2019s flagship fund, the Ark Innovation ETF, has struggled in recent years\u2014losing 24% and 67% in 2021 and 2022, respectively, her portfolio is starting to bounce back.<\/p>\n

The fund is up nearly 25% so far this year, compared to just 11% for the S&P 500. What\u2019s more, over the long term, the fund still boasts a solid track record with an annualized return of just over 10% since inception in 2014.<\/p>\n

Wood made a big name for herself after her flagship fund, the Ark Innovation ETF, returned more than 150% in 2020 amid the pandemic by investing in \u201cdisruptive innovation\u201d stocks like Zoom, Roku and Teladoc. As high-flying pandemic stocks eventually crashed back down to earth, however, Wood\u2019s flagship fund lagged the S&P 500 index by more than 30 basis points in both 2021 and 2022. Tech stocks were particularly hammered by the Federal Reserve\u2019s decision to embark on an aggressive interest rate-hiking campaign last year, though they have since recovered, helping lead the market higher this year.<\/p>\n

Similar to last year, Wood believes her fund will outperform the market as tailwinds from innovation trends act as deflationary forces and boost growth stocks. She pointed out that while inflation is correlated with higher oil prices, which have risen over 40% since their lows this summer, gas futures are down significantly. \u201cThis tells me that there is tremendous demand destruction,\u201d Wood said.<\/p>\n

The strength of the U.S. dollar is another powerful deflationary force, she pointed out, especially at a time when there are tremendous liquidity concerns in the rest of the world, particularly in countries like China and Japan.<\/p>\n

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While Wood argued that a broadening of innovation in the marketplace will help contribute to deflation and contribute to future growth, that doesn\u2019t mean the economy is set for a soft landing. \u201cWe\u2019re going to have a harder landing than most people expect\u2014particularly in the rest of the world but also in the U.S.,\u201d Wood predicted. That said, she is \u201cnot at all worried\u201d about an environment similar to the great financial crisis in 2008. The Ark Invest founder points to the fact that there has already been a lot of weakness in areas of the economy such as housing, auto sales and inventories.<\/p>\n

The innovation investor described a \u201cconvergence\u201d of several new and exciting technologies which she predicted will fuel exponential growth in the future: Artificial intelligence, robotics and energy storage. Costs are declining across all three technologies while the respective S-curves of growth are \u201cfeeding into each other,\u201d she argued.<\/p>\n

For some companies like Tesla<\/strong>, AI will accelerate growth from already rapid levels, Wood predicted. \u201cWe really haven\u2019t seen anything yet,\u201d she said, adding that most of Wall Street still misunderstands that Tesla will be a major beneficiary of AI. Wood currently estimates that the electric vehicle maker will hit a share price of $2,000 by 2027.<\/p>\n

Other stock picks that fit into this theme include companies like video conferencing software Zoom<\/strong> and virtual healthcare company Teladoc<\/strong>, both pandemic-era darlings which Wood first bought shares of in 2020. She also likes New York-based UiPath<\/strong>, a $1 billion dollar revenue company which specializes in robotic process automation; It is now her fifth-largest position, currently worth nearly $500 million.<\/p>\n

One of her most recent portfolio additions in the AI theme, meanwhile, is air taxi company Archer Aviation<\/strong>, which is developing an electric vertical take-off and landing (eVTOL) aircraft to use to transport people around cities. San Jose, California-based Archer is currently losing money but has a market capitalization of nearly $1.3 billion.<\/p>\n

Not all AI opportunities are equal though. Wood has recently continued to trim one of her longest holdings, chipmaker Nvidia<\/strong>, even though it is poised to benefit from the trend. She sold nearly $4 million worth of shares earlier this week, citing risks such as excessive valuation after the stock\u2019s massive 200% runup so far in 2023.<\/p>\n

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Wood has also recently taken profits on several other longtime holdings, namely Tesla, e-commerce giant Shopify<\/strong> and sportsbook and casino operator DraftKings<\/strong>.<\/p>\n

\u201cWe are earning our way back from last year\u2014a lot of our companies\u2019 earnings and revenue have started to surprise to the upside,\u201d Wood said at the conference. \u201cIt\u2019s uncontroversial to own cash right now, but that\u2019s a short term instrument\u2014deflationary forces brought about by innovation will cause rates to go down and that\u2019s good for growth.\u201d<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

While rising rates and sticky inflation may have put a damper on growth stocks in recent years, Ark Invest founder and CEO Cathie Wood is confident that they are primed for a rebound as innovative new technologies like artificial intelligence act as a major deflationary force. \u201cInnovation solves problems\u2014especially AI,\u201d Wood, whose firm has roughly […]<\/p>\n","protected":false},"author":1,"featured_media":68812,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-68811","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets","tag-featured"],"yoast_head":"\nCathie Wood Predicts AI Will Lead To Deflation And Drive Markets Higher | iFintechWorld<\/title>\n<meta name=\"description\" content=\"While rising rates and sticky inflation may have put a damper on growth stocks in recent years, Ark Invest founder and CEO 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